The Upcoming PASPA Decision Will Help Make 2018 A Big Year For The Fantasy Sports Industry

The Upcoming PASPA Decision Will Help Make 2018 A Big Year For The Fantasy Sports Industry

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Adam Wexler, CEO of Predict Picks, reflects on the state of the fantasy sports industry in the United States, and how the Supreme Court decision on PASPA (expected later this year) could spell good news for industry stakeholders.

The fantasy sports industry has been to hell and back over the last few years, but expect a lot of exciting developments in the year ahead.

For starters, the fantasy sports industry has witnessed exponential growth over the last three decades growing from 500,000 players in 1988 to 53,500,000 domestic players according to the 2017 Ipsos research on behalf of the Fantasy Sports Trade Association, where I Co-Chair the Research Committee. 
Why have we seen such explosive growth across domestic sports fans? One very clear reason: the Professional and Amateur Sports Protection Act (PASPA) of 1992. This bill limited single-game sports betting to the state of Nevada and an indirect beneficiary was the fantasy sports industry. Sports fans want reasons to pay attention to their favorite sports beyond their favorite teams, and fantasy sports games have given consumers an opportunity to stay engaged. 

In the Summer of 2015, the domestic US fantasy sports industry was thriving as hundreds of millions of dollars were pouring into many game operators via venture capitalists and strategic investors. This money then trickled down to all the content providers in the form of advertisements, sponsorships and affiliate revenue. By the end of the year, it was a different story as the regulators came in, and the only ones still thriving were the lawyers and their billable hours. 

From the beginning of 2016 to the Summer of 2017, many fantasy sports companies went out of business, and the ones who remained did everything they could to keep the lights on. The fact was the capital may have dried up, but the consumers never left. 

While innovation has largely slowed down as a result of the limited capital available, a related market development broader than the confines of the fantasy sports industry opened some eyes and spurred some industry activity this past Summer. 

In Late June, the Supreme Court announced they would be revisiting the 25-year old PASPA bill, and in Early December, they held the hearing. While the decision is not expected until Spring 2018, almost all in attendance concluded New Jersey will likely prevail against the professional sports leagues, and as a result, we will see legalised sports betting beyond Nevada's borders soon thereafter. In fact, Eilers & Krejcik Gaming expect the ramifications of this decision could ultimately lead to $15,800,000,000 annualised revenue via the proliferation of legalised sports betting across the country.  

As a result of this massive impending development, all kinds of stakeholders are strategising how to approach the US market. As they debate their different options, the fantasy sports industry offers one of the best possible entry points. 

According to the latest FSTA research, the makeup of the typical fantasy sports player is quite attractive:

  • 39 years old
  • 85% with some form of college education
  • 53% with household income above $75k
  • 67% full-time employment

If you're a Casino Operator, International Sportsbook, or B2B Sports Betting Software provider, fantasy sports companies have attracted the demographic you're looking for. Don't be surprised when we see many of these sports betting entities bringing back the advertising, sponsorship and affiliate dollars back to the fantasy sports industry in the new year. Beyond revenue, we've already seen a number of sports betting-inclined companies make broader moves within the fantasy sports industry over the last 18 months such as:

There are a number of other compelling fantasy sports assets, and you will likely see a lot of Mergers & Acquisitions over the course of the coming year. 

While many ask how legalised sports betting will impact the viability of fantasy sports games, don't be too worried. Season-long fantasy leagues have become a part of social fabric in the United States, and fantasy leagues offer a great way to keep in touch with friends. While certain daily fantasy sports games may be slightly marginalised by legalised sports betting, it's important to note legal online sports betting is years away from reaching the majority of the country so a number of formats will surely keep growing over the next few years.

For the US fans looking to raise the stakes with their professional sports viewing experience, they will only have more options as new formats hit the market in the future. The US sports fan experience is only looking up from here as the domestic fantasy sports industry and legalised sports betting quickly evolve.

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